Islamabad (National Times) The federal government has proposed the introduction of a new fixed tax system for small shopkeepers with annual sales of less than Rs. 2 billion in the federal budget 2026-27.

According to the proposal presented in the National Assembly by Finance Minister Muhammad Aurangzeb, eligible traders will pay only 1 percent of their annual sales as tax under the new regime.

The proposed system also allows shopkeepers to adjust withholding tax within the same framework, while a minimum tax payment of Rs. 25,000 will be mandatory.

Under the plan, small traders will be provided several facilitation measures, including exemption from routine audits, relief from withholding tax obligations on purchases, and exemption from POS machine requirements.

The government says the initiative aims to simplify the tax structure for small businesses, expand the tax base, and promote documentation of the economy.